Caution over Palm/Nokia merger

Analysts pour doubt over mobile rumours

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Rumours are growing that Nokia is looking to buy Palm . But while Palm has hired a banker to assess the company's takeover options, some think a merger with Nokia would be a bad move.

Palm's PDA and smartphones have not had the sales the company hoped for. Last year, Palm embraced the Windows Mobile operating system, as well as its own Palm OS. Nokia uses the Symbian OS, one its stuck with for years.

Speaking to ZDnet.com , analysts at Gartner said: "It would mean a huge shift for Nokia in terms of embracing Microsoft, which I just don't see happening at the moment.

"People might criticise Symbian for not being enterprisey enough but it's still a way [for Nokia] to differentiate themselves from what everyone else is doing with Microsoft."

Jeremy Green, principal analyst at Ovum , told ZDnet that buying Palm would suit a low-tier player in the mobile phones market. But added that Nokia's popularity in the US is a fraction of what it is in Europe.

"I suppose maybe Nokia thinks [buying Palm] could buy a share in North America, but it seems an expensive way of doing it," said Green.

The news of Palm reportedly hiring an investment banker to investigate take-over options sparked a rise in the company's share price.